Deck 2: Financial Management and Planning

Question 1

Limited partnerships have limited liability for all of the partners.

Answer 1

False

Question 2

A plan that relates to a specific area of a business, such as marketing, is known as a functional plan.

Answer 2

True

Question 3

Franchisers purchase the right to sell products or services of the franchisee.

Answer 3

False

Question 4

A franchiser sells the right to produce a product or service to the franchisee.

Question 5

A Subchapter S corporation can sell its stock to any number of shareholders.

Question 6

The Service Core of Retired Executives (SCORE) is a group of retired business owners and managers who provide help to small business owners.

Question 7

Public corporations have double taxation, limited liability for owners, and can raise large amounts of cash by selling stocks or bonds.

Question 8

The Service Core of Retired Executives (SCORE) is a group of retired government bureaucrats who provide help to small business owners.

Question 9

Prior to applying for a loan through an approved Small Business Administration lender, you must establish the form of business ownership.

Question 10

The buy -sell agreement preserves the continuity of ownership and insures that everyone is treated fairly.

Question 11

Public corporations have double taxation, unlimited liability for owners, and can raise large amounts of cash by selling stocks or bonds.

Question 12

The SBA, SCORE, and the authors recommend that an executive summary be attached to the beginning of the business plan.

Question 13

Partnerships have the same basic tax requirements as the sole proprietorship and are, therefore, the most popular form of business ownership.

Question 14

A limited liability partnership is legal in all states.

Question 15

A goal is a measurable objective that can be reached in a specified time frame.

Question 16

In a limited liability partnership, all of the partners have unlimited liability.

Question 17

In a limited liability partnership, all of the partners can participate in day -to -day operations.

Question 18

If a partner dies, his share of the partnership must be sold to an outsider.

Question 19

A plan that relates to a specific area of a business, such as marketing, is known as a strategic plan.

Question 20

The buy -sell agreement prevents a partner from selling a partnership interest without the consent of the other partners.

Question 21

Every succession plan must have a buy -sell agreement.

Question 22

The time horizon for strategic plans is

A) five years.
B) more than one year.
C) ten or more years.
D) fifteen or more years.
E) There is no definite time horizon for strategic plans.

Question 23

When obtaining funds for a business, investors provide money in exchange for partial ownership of the business.

Question 24

A mission statement is specific.

Question 25

The management function that takes us from some current state to a desired future state is

A) controlling.
B) staffing.
C) planning.
D) directing.
E) organizing.

Question 26

The basic five functions that every manager must perform include

A) planning, directing, organizing, staffing, controlling.
B) planning, financing, bookkeeping, controlling, staffing.
C) planning, organizing, controlling, directing, financing.
D) planning, organizing, bookkeeping, directing, staffing.
E) None of the above include all of the management functions.

Question 27

A company in the Later Stage of development usually has negative cash flow.

Question 28

The Operational plan describes how a business will actually deliver your product or service to the customer.

Question 29

Secondary data gathers information firsthand.

Question 30

When borrowing funds for a business, lenders provide money in exchange for partial ownership of the business.

Question 31

Company goals describe where you want your business to be at some future date.

Question 32

The SBA lends the funds for a business start -up but is not a guarantor of the loan.

Question 33

When composing a business plan, the executive summary should be written first

Question 34

If your business has more than 10 people, you do not need an organizational chart.

Question 35

Carla has just started a business and is asking herself the following question. Where do I want my business to be in five years? Carla is in the process of

A) analyzing her financial requirements.
B) establishing the basic control functions for her business.
C) establishing basic parameters for her business.
D) determining how to write a functional plan.
E) developing a strategic plan.

Question 36

A marketing mix is a marketing strategy.

Question 37

The executive summary is the initial introduction to the business plan.

Question 38

Converting functional plans into annual dollar requirements is the process of

A) monetary planning.
B) budgeting.
C) financial planning.
D) accounting.
E) controlling.

Question 39

The SBA has two major programs: 7(a) for general business purposes and 504 for the purchase of buildings or major equipment.

Question 40

The best place to get a loan for a business is the Small Business Administration because they loan you government funds.

Question 41

Geoffrey is in the process of determining how many people he will require to operate his restaurant during each business day. He is performing the management function of

A) planning.
B) controlling.
C) staffing.
D) directing.
E) organizing.

Question 42

Tom is establishing some basic plans for his business. He is in the process of writing down some basic questions that he believes the plans should answer. Which of the following questions does not relate to establishing a functional plan?

A) When will it be accomplished?
B) Where will they perform their duties?
C) Who will carry out this plan?
D) What skills do they need?
E) Where do I want my business to be in five years?

Question 43

Which of the following pertain to the internal workings of a company?

A) strengths and threats
B) opportunities and threats
C) opportunities and weaknesses
D) strengths and opportunities
E) strengths and weaknesses

Question 44

Carl is a construction supervisor. He has to make sure that the inside rooms of the house are painted by this evening because the carpeting company is scheduled to bring in the carpeting first thing tomorrow morning. He told Tim to paint the hall and told Anne to paint the master bedroom. Because he is short -handed, he will paint the kitchen. Carl is performing the management function of

A) organizing.
B) staffing.
C) directing.
D) controlling.
E) planning

Question 45

Which of the following is true for a Limited Liability Company (LLC)?

A) Business income is taxed at the corporate rate.
B) The owners have unlimited liability.
C) The company is limited in its liability.
D) Business income is taxed at the individual's personal rate.
E) None of the above.

Question 46

Carl, Anne, and Al were friends in college. After graduation they decided to open a company that sells computer printer ribbons and cartridges. They each have $20,000 to put into the business, and want equal shares of the business. They are not worried about liability because they are not actually going to work on printers or going to work in their customer's place of business. They also want to avoid double taxation. The most likely form of business organization for them would be a

A) limited partnership.
B) corporation.
C) partnership.
D) sole proprietorship.
E) Subchapter S corporation.

Question 47

One drawback to a partnership is that it

A) generally has more management expertise than the sole proprietorship.
B) generally has more access to capital than the sole proprietor.
C) has unlimited liability for each of the partners.
D) is subject to double taxation.

Question 48

The form of business ownership that involves double taxation and limited liability for the owners is the

A) corporation.
B) sole proprietorship.
C) limited partnership.
D) Subchapter S corporation.
E) partnership.

Question 49

Gathering all of the monetary requirements that a firm will need in order to support each functional plan is the process of

A) controlling.
B) accounting.
C) monetary planning.
D) budgeting.
E) financial planning.

Question 50

Carl, Anne, and Al were friends in college. After graduation they decided to open a computer consulting business. They each have $20,000 to put into the business, and want equal shares of the business. However, they are worried about liability because they had heard of a consultant who crashed a client's computer and was sued for $1,000,000. They also want to avoid double taxation. The most likely form of business organization for them would be a

A) Subchapter S corporation.
B) corporation.
C) partnership.
D) sole proprietorship.
E) limited partnership.

Question 51

Unlimited liability for the owner is a problem for which of the following?

A) limited partnership
B) corporation
C) partnership
D) sole proprietorship
E) both C and D

Question 52

You have always wanted to own your own McDonald's restaurant. You contacted this corporation and received the details of purchasing one of these restaurants. If you are granted permission, you will become a and the McDonald's corporation is the _ .

A) franchiser; franchisee
B) franchisee; franchiser
C) franchisee; franchisee
D) franchiser; franchiser

Question 53

The form of business ownership that gives the owner total control of how the business is run is the

A) Subchapter S corporation.
B) partnership.
C) corporation.
D) limited partnership.
E) sole proprietorship.

Question 54

The majority of businesses in the United States today are organized as

A) corporations.
B) limited partnerships.
C) sole proprietorships.
D) Subchapter S corporations.
E) partnerships.

Question 55

Jane is the president of a business. She runs the business on a daily basis and makes all of the decisions because she has ten years of experience in this business. There are ten other owners in this business, but they have no say in how this business is being run. Jane's business is probably organized as a

A) partnership.
B) sole proprietorship.
C) Subchapter S corporation.
D) corporation.
E) limited partnership.

Question 56

Timothy is in the process of establishing goals for his company. Which of the following is a goal?

A) Our business should market to all customers.
B) Our business should increase sales by 10 percent every year for the next five years.
C) Our marketing area should include the entire United States.
D) Our business should increase sales by 10 percent.
E) Our business should increase sales every year.

Question 57

Which of the following is NOT an advantage of obtaining a franchise?

A) marketing strategy and advertising
B) training of employees and managers
C) name recognition
D) having a predetermined location that guarantees a profit
E) standardization of products and services

Question 58

The sole proprietor has all of the following advantages, EXCEPT

A) choice of location for the business.
B) choice of how to pay federal and local taxes.
C) choice of product to be sold.
D) choice of retirement plan.
E) choice of services to be offered.

Question 59

Which of the following is NOT a disadvantage of the sole proprietorship?

A) limited lifetime of the business
B) limited liability for the owner
C) limited management expertise
D) limited access to capital

Question 60

Jennifer is the manager of a credit card processing department. She has determined that each processor should be able to input information on 75 credit purchases per hour. She has established a range of plus or minus 5 purchases and an error rate of no more than 2 per hour. Jennifer is performing the management function of

A) planning.
B) directing.
C) staffing.
D) controlling.
E) organizing.

Question 61

When running a SWOT analysis, one should also consider personal strengths and weaknesses because

A) business owners should evaluate those items where they are weak.
B) business owners should list those items that they really dislike doing.
C) business success requires that owners have no weaknesses.
D) both A and B above.
E) both B and C above.

Question 62

Which of the following is a weakness?

A) inexperienced workers
B) an area of your business that you perform well in
C) you perform better than your competitors
D) none of the above

Question 63

When applying for a loan with the Small Business Administration, you will have to provide tax returns for a period of

A) five years.
B) two years.
C) one year.
D) four years.
E) three years.

Question 64

The financial plan consists of

A) breakeven analysis.
B) a 4 -year profit projection.
C) a 12 -month projection.
D) all of the above.

Question 65

George is analyzing the market for his bagel business. He noticed that there are no bagel shops in the northeast section of his city. For George's bagel business, this represents a(n)

A) weakness.
B) obligation.
C) strength.
D) opportunity.
E) threat.

Question 66

An executive summary should be attached to

A) the end of the completed business plan.
B) the beginning of the business plan.
C) the middle of the business plan.
D) none of the above.

Question 67

SCORE is a source of information and training for the small business owner. The acronym SCORE stands for

A) Service Core of Retired Executives.
B) Special College for Retraining Employees.
C) Special Core of Retired Entrepreneurs.
D) Service College for Retaining Employees.
E) none of the above.

Question 68

A mission statement

A) helps the organization reach its goals.
B) is a brief statement explaining the purpose of the company and its guiding principles.
C) is very specific.
D) none of the above.

Question 69

Environmental factors can lead the business owner to evaluate and change his or her business plans. An industry that recently underwent a major shift in marketing due to technological change and new competition, according to the textbook, is

A) the fast food industry.
B) the automobile industry.
C) the cereal industry.
D) the convenience store industry.
E) the oil industry.

Question 70

Which of the following should NOT be in the executive summary?

A) a brief description of the product or service
B) a summary of quarterly revenue
C) an estimate of how much money you will need
D) tour business strategy for success

Question 71

Which of the following stages has a concept and is less than 18 months old?

A) seed/start -up stage
B) early stage
C) expansion stage
D) later stage

Question 72

Location is probably the single most important factor affecting the success of the establishment.

A) manufacturing
B) retailing
C) wholesale
D) both A and B above
E) both B and C above

Question 73

George is analyzing the market for his bagel business. He knows that his shop has the highest quality bagel in the city. He has picked up several customers who previously shopped at a competitor but told him they switched because of his consistent quality. For George's bagel business, this represents a(n)

A) weakness.
B) threat.
C) opportunity.
D) strength.
E) obligation.

Question 74

In identifying your form of business ownership, which of the following should be included?

A) advantages of your choice
B) your ownership structure
C) reasons for your selection
D) all of the above

Question 75

Bankers differ from investors in that

A) bankers are looking for a return on equity.
B) bankers are looking for assurances of interest payments and repayment of the principal of the loan.
C) bankers are looking for company growth.
D) all of the above.

Question 76

Which of the following is an example of primary data?

A) gathering your own data firsthand
B) gathering information about your competition
C) public information in libraries
D) reading the newspaper

Question 77

Which of the following pertain to the external factors that are outside the control of a company?

A) strengths and threats
B) opportunities and weaknesses
C) opportunities and threats
D) strengths and opportunities
E) strengths and weaknesses

Question 78

George is analyzing the market for his bagel business. He saw an advertisement for a new bagel shop that has just opened one mile from his bagel shop. For George's bagel business, this represents a(n)

A) strength.
B) obligation.
C) threat.
D) weakness.
E) opportunity.

Question 79

SWOT is an acronym which stands for

A) Strengths, Working capital, Opportunities, and Threats.
B) Strengths, Weaknesses, Obligations, and Threats.
C) Strengths, Working capital, Obligations, and Threats.
D) Strengths, Weaknesses, Opportunities, and Threats.
E) Strengths, Weaknesses, Opportunities, and Troubles.

Question 80

Which of the following variables in the marketing mix is the easiest to change rapidly?

A) place
B) price
C) promotion
D) product